Talent Retention: A Strategic Imperative in a Recovering
Economy
David Conradie, Director: Deloitte Consulting (Pty) Ltd
ORT JET Seminar
17th August, 2012
- 2 -
Agenda
Why the concern about talent retention? Why Now? 3
What can organisations do to keep their employees from leaving? 28
The Generational Divide – ―One Size Does Not Fit All‖ 38
Contact Information 50
Why The Concern About Talent Retention?
Why Now?
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Deloitte‘s two longitudinal survey series have focused on emerging
global talent issues and trends
Managing Talent in a Turbulent Economy: Where are
you on the recovery curve?—This report surveyed 335
global executives and finds that companies which
―walk the walk‖ on leadership not only have the right
programs in place to develop their leaders effectively,
they have a different view of the world—and a jump on
their competitors (January 2010).
Click here to access
Has the Great Recession Changed the Talent
Game? Six guideposts to managing talent out of a
turbulent economy—Throughout 2009, Deloitte’s
longitudinal survey series took the pulse of business
and talent leaders in the marketplace as
organisations navigated through shifting economic
conditions. This report summarises those findings
and identifies six key guideposts executives should
consider as they move past the recession and face
the challenges of the new economy (April 2010).
Click here to access
Managing Talent in a Turbulent Economy: Keeping
your team intact—The study examines employees’
perspectives on retention, their turnover intentions,
and how their responses vary across the different
workforce generations and in comparison to
employers’ perspectives (September 2009).
Click here to access
Managing Talent in a Turbulent Economy
2009-2010
Blueprints for the new normal—This inaugural Talent
Edge 2020 report features results from an October
2010 survey that polled 334 senior business leaders
and human resource executives at large global
businesses. This report explores talent strategies and
unfolding employee trends related to retention and the
new challenges posed by the recession
(December 2010).
Click here to access
Building the recovery together—What talent expects
and how leaders are responding—This study probes
divergences between the attitudes and desires of three
generations of employees and the talent strategies and
practices being utilized by employers. This report
features results from the March 2012 survey that polled
356 employees at large businesses across the globe
(April 2011).
Click here to access
Redrafting talent strategies for the uneven recovery—
The latest Talent Edge 2020 edition is based on a
survey of 376 global senior executives and talent
managers. Findings from this study highlight how
companies are tackling the evolving talent challenges
and reshaping their talent strategies in uncertain
economic times (January 2012).
Click here to access
Talent Edge 2020
(2010-2012)
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The talent paradox: Executives are realizing that despite unemployment
levels peaking, the prevailing talent shortage continues unabated
Surveyed organisations conducting/
anticipating layoffs
As used in this document, ―Deloitte‖ means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal
structure of Deloitte LLP and its subsidiaries.
Source: Talent Edge 2020: July 2012, Deloitte.
41 %
36%
53% 51%
6%
13%
Past 6 months Next 6 months
Yes
No
Don't know
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As part of their focus on competing for talent, almost half of the surveyed
global executives are concerned about voluntary turnover
71% of surveyed executives
expressed high (43%)
or very high concern
(28%) about losing
critical and high-
potential talent
47%
of surveyed executives
predicted an increase in
voluntary turnover at
their companies over
the next 12 months
49% of surveyed executives
recalled that voluntary
turnover at their
companies increased in
the last 12 months
Source: Talent Edge 2020: Redrafting talent strategies for the uneven recovery, January 2012, Deloitte.
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Our research shows that executives are right to be worried as there is
typically a cyclical rise in voluntary turnover after a downturn
Quit level of employees vs.
unemployment rate Quit level of employees vs. Conference
Board Consumer Confidence Index
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Quit Level in Thousands of Employees, Total Nonfarm, Seasonally Adjusted
Conference Board Consumer Confidence Index
Source: Bureau of Labor Statistics, St. Louis Federal Reserve Economic Data.
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Down from 65% in 2011, our recent research shows that only 20% of all
surveyed employees are considering leaving their jobs in the next 12 months
Sources: * Talent Edge 2020: July 2012, Deloitte.
** Griffeth, R. W., Hom, P. W., & Gaertner, S. (2000). A meta-analysis of antecedents and correlates of employee turnover: Update, moderator tests, and research
implications for the next millennium. Journal of Management, 26, 463-488.
45%
35%
80%
55%
65%
20%
2009 2011 2012
Employees who expect tostay with their currentemployer
Employees who have been,plan to, or are currentlyseeking new employment
During the past year,
46% of employees have
moved to new jobs,
received a promotion
or changed roles with
their current
employers – all
factors that might
make them less
inclined to move
during the next 12
months
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35%
30%
20%
12%
12%
12%
Millenials/Gen Y Gen X Baby Boomers
Very High
High
Surveyed executives feel concerned about retaining employees who might be
the most likely to leave . . .
Surveyed executive predictions regarding voluntary turnover over the
next 12 months by generation
Source: Talent Edge 2020: Redrafting talent strategies for the uneven recovery, January 2012, Deloitte.
- 10 -
32%
41%
23%
58%
21%
23%
38%
33%
44%
I am currently seeking new employment
I plan to begin looking for newemployment within the next 12 months
I am passively looking for newopportunities
Babay Boomers Generation X Millennials
. . . But they might not have a good handle on which employees they risk losing
Surveyed employees seeking new employment by generation*
Source: Talent Edge 2020: July 2012, Deloitte.
Baby Boomers
are looking
passively
Millennials
are preparing
to look
*Survey participants could choose more than one response.
Gen Xers are
already
looking
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Why are surveyed employees looking to leave their employers?
Top 10 factors that would cause surveyed employees to look for new
employment over the next 12 months
Source: Talent Edge 2020: July 2012, Deloitte.
Non-financial
Financial
15 %
17 %
20 %
20 %
21 %
21 %
21 %
22 %
22 %
27 %
Inadequate or reduction in benefits(i.e., health and pensions)
Lack of trust in leadership
Excessive workload
Lack of job security
Lack of compensation increases
Lack of adequate bonus or otherfinancial incentives
Lack of challenge in the job
Dissatisfaction with supervisor ormanager
New opportunities in market
Lack of career progress
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The 20% of surveyed employees looking to leave their companies
believe key talent programmes are seriously lacking
Uncertain career paths
• A significant percentage of surveyed employees planning to leave their current employers (30%) believe
their companies do a ―fair‖ job of creating career paths and challenging job opportunities, compared to only
7% who rate this key talent metric as ―excellent‖ or ―world-class‖
Little leadership development
• 47%, surveyed employees who do not expect to stay at their current employers rate their companies’
leadership development programmes as ―fair/poor‖ rather than ―excellent/very good‖
Lack of trust in leadership
• Only 26% of surveyed employees planning to depart believe their companies inspire trust in leadership
effectively (―excellent/very good‖), compared to the 46% who rank these efforts as ―fair/poor‖
Difficulty retaining top performers
• Of those surveyed employees who expect to depart, 41% believe their companies are doing a ―fair/poor‖
job retaining top performers, compared to 29% who label retention efforts in this area as ―excellent/very
good‖
Inadequate training programmes
• Nearly half of the employees surveyed (47%) who plan to leave their current jobs believe their companies
are doing a ―fair/poor‖ job managing and delivering effective training programmes; just 23% rate training
programmes as ―excellent/very good‖
Source: Talent Edge 2020: July 2012, Deloitte.
.
20%
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The cost of voluntary turnover is significant…and perhaps not well
understood
Direct financial costs for recruiting,
attracting, and training a new
employee are fairly fixed and typically
less than 50% of the position’s
annual compensation
Indirect costs are wide-reaching and
can vary from 50% to 150% of the
position’s annual compensation,
including:
• Lost productivity
• Impact on customer relationships
• Knowledge drain
• Burden to employees who must take on
additional work*
66% of surveyed executives
believe voluntary
turnover will actually
increase their
companies‘
profitability**
Sources: * ―Talent-Based ROI – Ways to Improve Employee Impact to the Bottom-Line,‖ 2008, Deloitte; ―Where did our employees go?‖ Deloitte Review, Issue 5, 2009;
Society for Human Resource Management, ―Cost of Turnover,‖ SHRM Briefly Stated ROI Series, November 1, 2005;
** Talent Edge 2020: Blueprints for the new normal, December 2010, Deloitte.
- 14 -
In addition, talent shortages can have a significant impact on business
effectiveness
Limited productivity and efficiency
Limited ability to achieve innovation
requirements
Limited ability to achieve quality
improvement objectives
Limited speed to market of new
products/services
Detriment to customer relationships
Limited ability to grow fast enough to
meet customer demand
Executives who are counting on a ―jobless‖ recovery can risk being caught
without the skills and leadership they need. When the economy heats up, these
companies risk a ―resume tsunami” — where employees with a desire to switch
jobs take increased confidence from better times and seek out new opportunities
in the talent marketplace
- 15 -
The real surprise is that even when companies are aware of what the primary
causes of voluntary employee turnover are, they are simply not doing enough to
eliminate them.
Too many employer organisations are still relying on tangible, easy-to-implement
solutions that revolve around pay, benefits, trendy perks, despite widespread
recognition that the most powerful solutions revolve around the more challenging
intangibles, such as good management, a healthy corporate culture and authentic
leadership.
Awareness is Not Enough
What Can Organisations Do to Keep Their
Employees From Leaving?
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Organisations should consider first identifying their critical workforce
segments and then develop/update retention plans
Only
40% of executives surveyed in
October 2011 reported that
their companies had an
updated plan in place to
manage retention
Critical workforce segments are roles within an organisation that:
• Drive a disproportionate share of key business outcomes
• Influence an organisation’s value chain significantly
• Are in short supply from the respective labor market
Critical workforce segments include roles central to execution of the business strategy
Within critical workforce segments, critical leaders/executives should also be identified
Designing retention plans specifically to meet the needs/expectations of
critical employees and executives can significantly improve the value of
talent management investments
Source: Talent Edge 2020: Redrafting talent strategies for the uneven recover, January 2012, Deloitte.
- 18 -
Identify CWS: Not all workforce segments drive equal value
No two businesses, even those from the same industry with similar customers and similar
business goals, will have identical formulas for talent. Each company will need to have its
own distinctive talent strategy. Development of a talent strategy starts with the identification
of critical workforce segments.
Considerations
Do you know what segments of your workforce are providing the most value to the organisation?
How much is your business spending to recruit and nurture talent that is not critical to the business?
Do you know where the gaps of critical skills exist and corresponding market availability?
What cost-effective alternatives exist for sourcing the capabilities that your business needs?
Buy
Build Borrow
Rent
Redeploy Reduce
5 3 1 2 4
5
3
1
4
2
Impact on value chain
Difficult t
o r
epla
ce s
kill
s
Critical Workforce Segments:
Consist of highly skilled, highly
trained individuals who drive a
disproportionate percentage of
revenue growth
Core Workforce: Reflects the
backbone of the company who are
well - trained on firm processes but knowledge and skills are easily
replaced
Flexible Labor: Reflects alternatives companies can use to meet periods of high demand for employees or the
need to lower costs
Specialists: Reflect alignments
formed where companies do not have the existing skills and cannot develop them in -
house cost effectively
-
Specialists
Core Workforce Flexible Labour
Critical Workforce
Segments
Specialists Reflect
alignments
formed where
companies do
not have the
existing skills
and cannot
develop them
in house cost
effectively
Flexible
Labour Reflects
alternatives
companies can
use to meet
periods of high
demand for
employees or the
need to lower
costs
Critical
Workforce
Segments
Consists of
highly skilled,
highly trained
individuals who
drive a
disproportionate
percentage of
revenue growth
Core
Workforce Reflects the
backbone of
the company
who are well
trained on
processes but
knowledge and
skills are easily
replaced
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Identify Critical Workforces: Sample in Financial Services
As an example, two insurance organisations will focus on different segments based on their business objectives Example 1:
An insurance company with a business model centered around
customer intimacy will focus its Talent Strategy on customer facing,
front-line staff, such as relationship managers, sales agents, and
financial advisors.
Example 2:
An insurance company striving to deliver innovative solutions to the
marketplace will concentrate its Talent Strategy on the workforce
segments focused on product design, such as actuaries and
underwriters.
Insurance Banking Securities Insurance Banking Securities
Relationship
Managers
Relationship
Managers
Relationship
Managers
Insurance Sales
Agents
Financial Services
Sales Agents
Financial Advisors
Underwriters Commercial Loan
Underwriters
Portfolio Managers
Actuaries Financial Advisors Asset Managers
Claims Adjusters Portfolio Managers Brokers
Examiners and
Investigators
Financial Analysts Compliance
Officers
Customer and
Field Support Staff
Retail Bank Tellers Financial
Engineers
Claims Reps Retail Branch
Managers
Technology and
Operations Staff
Market Research
Analysts
Customer Service
Reps
Investment
Bankers
Relationship
Managers
Relationship
Managers
Relationship
Managers
Insurance Sales
Agents
Financial Services
Sales Agents
Financial Advisors
Underwriters Commercial Loan
Underwriters
Portfolio Managers
Actuaries Financial Advisors Asset Managers
Claims Adjusters Portfolio Managers Brokers
Examiners and
Investigators
Financial Analysts Compliance
Officers
Customer and
Field Support Staff
Retail Bank Tellers Financial
Engineers
Claims Reps Retail Branch
Managers
Technology and
Operations Staff
Market Research
Analysts
Customer Service
Reps
Investment
Bankers
Critical Workforce Segment
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The 80% of employees planning to stay with their employers agree
on one clear factor: Strong talent programmes
Overall HR/talent efforts
31% and 19% of the surveyed employees, believe their companies are doing a ―good‖ and ―very good‖ (respectively)
job in their overall HR/talent efforts
Create clear career paths
44% of the employees committed to their employers believe their companies are doing a ―good/very good‖ job of
creating clear and robust career paths for their employees
Maintaining trust/confidence in leadership
Almost half of the surveyed employees (47%) believe their employers are ―good/very good‖ at inspiring trust and
confidence in corporate leadership
Employee engagement/morale
Surveyed employees with ―world class‖ or ―very good‖ talent programmes are more likely to remain with their current
employer
Quality of employee communications
• 36% of employees surveyed believe that their employers do a good job communicating with them in order to remain
transparent in times of economic uncertainty
Source: Talent Edge 2020: July 2012, Deloitte.
80%
- 21 -
6 %
9 %
14 %
19 %
22 %
25 %
26 %
41 %
42 %
44 %
New training programs
Opportunity to work abroad
Individualized career planning
Additional benefits (i.e., health and pensions)
Leadership development opportunities
Support and recognition from supervisors ormanagers
Flexible work arrangements
Additional compensation
Promotion/Job advancement
Additional bonuses or financial incentives
Source: Talent Edge 2020: July 2012, Deloitte.
Top 10 factors that would be most effective in keeping surveyed
employees with their current employer over the next 12 months
The top three reasons for employees to remain with their companies over the
next 12 months are related to financial gains
Non-financial
Financial
- 22 -
Survey results indicate turnover trends and motivations also vary across
global regions
Only 26% of employees in Americas and almost half (47%) of the
surveyed EMEA employees are anticipating layoffs in their organization in the next 6
months
26% of the surveyed
employees in Europe/the
Middle East/Africa (EMEA)
thought that ―lack of challenge in
the job‖ would be the #1 reason
for them to leave an employer
53% of the
surveyed employees
in Asia Pacific
(APAC) are
currently seeking
new employment,
with 45% in
America and
39% in EMEA
Top factors for surveyed
employees in Americas to
leave their current employers
are financial – Lack of
Compensation at 24%
and Lack of adequate bonus
at 22%
Source: Talent Edge 2020: July 2012, Deloitte.
The Generational Divide - ―One Size Does Not Fit All‖
- 24 -
Different generations have different goals, expectations, and desires—and
employers should tailor their retention plans to satisfy them all
Generation X
(ages 32-47)
Skeptical
Pragmatic
Adaptable
Self-reliant
Informal
Techno literate
Diversity-minded
Focused on today
Baby Boomers
(ages 48-65)
Veterans
(over age 65)
Competitive
Optimistic
Driven to achieve
goals
Focused on their
children
Judgmental of differing
opinions
Political
Disillusioned
Reactive
Cynical about
institutions
Realistic
Pragmatic
Risk-taker
Critic
Millennials
(ages 16-31)
Techno savvy &
connected 24/7
Optimistic
Confident
Comfortably
self-reliant
Entrepreneurial
Success-driven
Inclusive
Environmentally
minded
- 25 -
13 %
13 %
14 %
19 %
20 %
20 %
22 %
28 %
28 %
38 %
Lack of trust in leadership
Inadequate or reduction in benefits (i.e., healthand pensions)
Excessive workload
Lack of adequate bonus or other financialincentives
Lack of job security
Lack of compensation increases
New opportunities in market
Lack of challenge in the job
Dissatisfaction with supervisor or manager
Lack of career progress
The top four reasons to cause Millennials to look for new employment are
non-financial factors
Top 10 factors that would cause surveyed Millennials to look for new
employment over the next 12 months
Source: Talent Edge 2020: July 2012, Deloitte.
Non-financial
Financial
- 26 -
Promotion/Job Advancement with additional financial incentives are the top
three reasons to make Millennials stay with their current employer
Top 10 responses for most effective retention initiatives for
surveyed Millennials
Source: Talent Edge 2020: July 2012, Deloitte.
Non-financial
Financial
10 %
14 %
16 %
17 %
17 %
24 %
31 %
41 %
41 %
47 %
Mentoring programs
Opportunity to work abroad
Flexible work arrangements
Additional benefits (i.e., health andpensions)
Individualized career planning
Support and recognition from supervisorsor managers
Leadership development opportunities
Additional compensation
Additional bonuses or financial incentives
Promotion/Job advancement 47%
- 27 -
Our research showed that along with financial incentives, surveyed
Millennials seek a corporate culture with progressive values
Surveyed Millennials have a sharply different idea
of what makes for a strong corporate culture than
other generations:
When asked how important a company’s
commitment to ―sustainability‖ is, 36% of the
Millennials rated it ―very important‖ compared
to just 25% of Baby Boomers
Almost 2:1 (41% to 25%), Millennials were more
likely to consider their employers’ commitment to
―corporate responsibility/volunteerism‖ to be
very important than were Baby Boomers
29% of the surveyed Millennials called a ―fun
work environment‖ very important, as compared
to 0% of the Baby Boomers
Millennials typically share a desire to pull themselves up the corporate ladder
and want the financial rewards that come with that career progress. But when
considering employers, they also seek a corporate culture that aligns with a
different set of values than their more experienced colleagues
Source: Talent Edge 2020: July 2012, Deloitte.
- 28 -
Surveyed Generation X employees place high importance on new career
choices and opportunities when choosing employers
Top 10 factors that would cause surveyed Gen Xers to look for new
employment over the next 12 months
Source: Talent Edge 2020: July 2012, Deloitte.
Non-financial
Financial
15 %
16 %
18 %
18 %
19 %
20 %
21 %
22 %
24 %
34 %
Inadequate or reduction in benefits(i.e., health and pensions)
Lack of trust in leadership
Excessive workload
New opportunities in market
Lack of job security
Lack of compensation increases
Dissatisfaction with supervisor ormanager
Lack of challenge in the job
Lack of adequate bonus or otherfinancial incentives
Lack of career progress
- 29 -
Promotion/Job Advancement is still the top reason for Gen Xers to stay at their
current jobs; although the margin has reduced considerably since last year
Top 10 responses for most effective retention initiatives for
surveyed Gen Xers
Source: Talent Edge 2020: July 2012, Deloitte.
Non-financial
Financial
7 %
12 %
15 %
19 %
21 %
26 %
27 %
38 %
44 %
47 %
Additional discretionary perks (i.e., per-diem allowances, transportation, etc.)
Opportunity to work abroad
Additional benefits (i.e., health andpensions)
Individualized career planning (within yourcompany)
Support and recognition from supervisorsor managers
Leadership development opportunities
Flexible work arrangements
Additional compensation
Additional bonuses or financial incentives
Promotion/Job advancement 47%
- 30 -
Our research showed that Generation X wants to move up or move out
Nearly six in ten Gen Xers surveyed (58%) report they
are currently seeking a new job or have been actively
looking over the past year
One of the biggest talent challenges many companies
face is opening up career paths for the next generation
of corporate leaders
―Lack of career progress‖ was the clear, number one
exit trigger for Generation X at 34%.―Lack of adequate
bonus or other financial incentives‖ and ―Lack of challenge
in the job‖ lagged well behind at 24% and 22%,
respectively
Only 16% of the surveyed Gen Xers were ―very satisfied‖
with the bonuses they received this year
―Promotion/Career Advancement‖ was the number one
retention initiative for Generation X at 47%.―Mentoring
programs‖ and ―New training programs‖ were the least
effective retention initiatives at 4% and 6% respectively
Many Gen Xers surveyed appear frustrated that they are bumping up against
the ―gray ceiling‖—with career paths blocked by Baby Boomers who are not
moving out of the workforce
Source: Talent Edge 2020: July 2012, Deloitte.
- 31 -
Assessing the narrow range (26% – 16%) of the top ten ‗exit factors‘ for Baby
Boomers, it appears that these might be based on individual opinions…
Top 10 factors that would cause surveyed Baby Boomers to look for
new employment over the next 12 months
Source: Talent Edge 2020: July 2012, Deloitte.
Non-financial
Financial
16 %
16 %
19 %
19 %
19 %
20 %
21 %
23 %
24 %
26 %
Inadequate or reduction inbenefits (i.e., health and pensions)
Lack of career progress
Lack of trust in leadership
Lack of challenge in the job
Lack of adequate bonus or otherfinancial incentives
Lack of job security
Dissatisfaction with supervisor ormanager
Lack of compensation increases
Excessive workload
New opportunities in market
- 32 -
…In contrast, additional financial incentives, by far, are the top two retention
incentives for surveyed Baby Boomers
Top 10 responses for most effective retention incentives for
surveyed Baby Boomers
Source: Talent Edge 2020: July 2012, Deloitte.
Non-financial
Financial
6 %
6 %
8 %
16 %
23 %
29 %
30 %
34 %
44 %
45 %
Additional discretionary perks (i.e., per-diemallowances, transportation, etc.)
Opportunity to work abroad
Individualized career planning (within yourcompany)
Leadership development opportunities
Additional benefits (i.e., health and pensions)
Support and recognition from supervisors ormanagers
Flexible work arrangements
Promotion/Job advancement
Additional compensation
Additional bonuses or financial incentives
- 33 -
Our research showed that many surveyed Baby Boomers feel frustrated and
betrayed
Surveyed Baby Boomers expressed the strongest
discontent with their employers and the most frustration that
their loyalty and hard work has been neither recognised nor
rewarded:
Almost a third of Baby Boomers surveyed (31%) report that
morale at their companies has dropped over the past
year. This might be because 84% of the Baby Boomers have
not been promoted in the last 12 months
Nearly four in ten Baby Boomers (38%) are currently seeking
new employment, although 61% of the surveyed employees
have been with their current employer for 10 years or more as
compared to only 2% of the Millennials
Nearly five in ten surveyed Baby Boomers (49%) labeled their
companies‘ ability to inspire trust and confidence in
leadership as ―fair/poor‖
Employers, by and large, have not been effective at creating career options
for employees working past 65, even though many employers want their
experience and will need their skills. Addressing the issue of how to engage
older employees should be considered a talent priority
Source: Talent Edge 2020: July 2012, Deloitte.
- 34 -
Who is Accountable for Talent Retention?
It must be borne in mind that neither mangers nor organisations can always
prevent a highly valued employee from leaving, or even delay the decision to
leave.
Nevertheless, research confirms that an employee’s direct supervisor/manager
has the major share of control or influence over the factors identified as the root
causes of voluntary turnover.
However, employees sometimes do leave companies too, and the senior leaders
who run those companies. In fact, it is the senior leaders who set the strategic
direction, shape the culture, approve the remuneration policy and pay ranges,
and the training budget, and whose demands often bring stress and overload.
Ultimately, there is a collective accountability on the part of line managers,
senior leaders, human resources practitioners and the employees themselves to
collaboratively drive employee engagement and thereby reduce the incidence of
avoidable voluntary turnover.
Contact Information
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Contact Information
David Conradie
Director
Deloitte Consulting (Pty) Ltd
Email: [email protected]
Office: +27 11 517 4207
Mobile: +27 82 469 1010
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